New Stock Added to the Bf Gf Portfolio!

CBurrito

burrito dreams

 

I have been eyeing this stock for quite a while but couldn’t pull the trigger to buy it due to its high valuations.  It had been trading around 46-49 PE during the period that I was eyeing it.  This quarter, the company released earnings and because same store sales missed estimates, the stock price proceeded to tank by about 8% within 2 straight days.

 

I don’t understand.  The earnings still managed to grow year on year by 47% and free cash flow was up 35%, yet the market punishes the stock because it missed estimates.  For the sake of new readers who have never been to this blog, this is how I feel about earnings missing estimates.  The management also warned that sales growth in existing stores would slow down, which is natural in my opinion, considering that whenever you open a new store, you will probably max out the clientele in that geographical location after a period of time.

 

This company has a formidable culture and branding.  It is taking on a big goal to change the way we eat.  It wants to educate the world about eating healthy, organic food.  Sounds pretty hippy, ain’t it?  But management put their money where their mouths are, and the company underwent a makeover many years back by partnering with organic farmers.  Instead of adopting a cut-throat corporate culture, it has adopted the model of conscious capitalism, by making sure that their suppliers and staff are paid above market rate, so as to squeeze the best product, service and performance out of them.

 

They are leaders in the fast casual restaurant industry and they are anti-thesis of fast food companies like McDonalds, KFC and Burger King.  This company has also been the stock market darling for the past 7 years so naturally investors are getting panicky about whether it will lose steam.

 

Since it’s sales are slowing, won’t it’s growth slow?  Due to their CEO’s stringent, obsession over quality of ingredients, they are also currently missing out key ingredients on their menu as they have not found a suitable supplier that meets management standards yet.  Won’t this affect the demands of their customers?  Also, it has been a 10 bagger in the last few years, why are you getting in on it now?  Aren’t you worried about entering at the peak?

 

The markets have also been on a bull run for so many years and the so many nations are printing money!  Greece is also exiting the euro!  Aren’t you worried of a correction?!?!?

 

zen investor OHHHMMMMMmmmmmmmmmmm………

 

 

According to the Bf Gf Money Blog tradition, all new additions will receive a TEASER post first before a proper post.  

 

In the meantime, if you like reading my blog and wish to see how the Bf Gf Portfolio unfolds for the year 2015, subscribe below.  Then you will never miss an update or a good lobang!

Keep Calm and Invest on,  dear Readers.     

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11 Comments

  1. Winston Koh

    You write extensively on the stock but do not give the stock name.

    What’s the rationale for readers like me?

    Reply
    1. The Bf (Post author)

      Hi Winston,

      The name will be given once I do up a proper ‘report’ on the stock.

      Reply
  2. mslee888

    Hi, I suggest you do a “proper” report before posting. I do not understand the rationale of writing an “intro” without giving details. How to give comments in this case? Isn’t it a waste of time for readers?
    Thanks

    Reply
    1. The Bf (Post author)

      You just gave a comment! Hahaha ! Ok just kidding don’t get pissed.

      Next time I will put the word “Teaser” so that your time won’t be wasted reading my ramblings.

      Anyway, you are reading this blog for free, and I am sharing info for free, so ….?

      Reply
  3. SeeKayGo

    Do you mean BreadTalk?

    Reply
    1. The Bf (Post author)

      Hi SeeKay,

      It’s a US company. The pictures show the clues – Burritos….Mexican food….

      But thanks for bringing up Breadtalk. That’s one company I heard a lot of good things about but haven’t researched on it. Do you own Breadtalk?

      Reply
      1. SeeKayGo

        Hi BF,

        Nope, I didn’t own any of BreadTalk, but some bloggers have been mentioning about this every now and then.

        So, I think it should be a good counter.

        Reply
  4. juv

    US based fast food.. Chipotle? He he….

    Reply
    1. The Bf (Post author)

      Ok you win! Hahaha! Yes it is Chipotle Mexican Grill!

      Reply
      1. juv

        I was introduced to Chipotle in the “real way”, I eat there. Turns out food is very nice, and so I had it 3 times during 2 weeks in U.S. Then I come back to SG and check out that the company actually is doing absolutely well, stock wise. Not sure if you are aware but they are having problem with their pork supplier and hence, pork carnitas is not available in some outlets which is hurting their sales. You can read about it by googling for the news on Bloomberg. But I read that this issue is being resolved with a new suppliers so by year end they should have enough pork supplies. I’ll be glad to see more of your research on this company.

        Reply
        1. The Bf (Post author)

          Awesome, I can only imagine how good it tastes. Yes I did not dare to buy because I was worried about their pork supply. But even with pork not on the menu, they still grew earnings 47% Q-on-Q.

          I had a discussion with an investor friend of mine, and we actually came to a conclusion that the CEO’s obsession with quality actually makes their branding stronger.

          So this pork incident may actually show suppliers that they cannot compromise quality; and customers can feel assured that their food quality is being obsessed over by the Chipotle management.

          Reply

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